Sorry about the confusion everyone, to answer questions:
There IS a betting pool for each match. I don't know why it isn't in the OP, I must have forgotten to include it. However, the compulsory bet against the House is entirely separate to the pool, meaning you will always get 100 points if you are not eliminated from the tournament.
Example:
Earthworm vs lotuspirate
chaos vs Serebii
Jumpman16 vs badalcristiano
DougJustDoug vs X-Act
Earthworm bets 50 on himself against the house, 50 on chaos, and 50 on Jumpman16. DougJustDoug bets 50 on chaos and 50 on badalcristiano, the opponent of Jumpman16. X-Act bets 50 on chaos, 50 on Earthworm, and 50 on Jumpman16.
chaos wins, and since there are no bets against chaos, the House puts 50 points up automatically. Earthworm, DougJustDoug, and X-Act split the pot of 200 points (50 from each of them and 50 from the house) between them, giving them 200/3 points each, rounded down to 66 points each -- a 16 point profit.
badalcristiano somehow topples Jumpman16, so DougJustDoug gets the pot of 150 points all to himself -- a 100 point profit.
Earthworm beats lotuspirate and X-Act consequently receives 100 points, because once again the House put up 50 points. He gains 50 from his bet.
So to sum up:
The point totals of the battlers in a match are not changed at all by outsiders' bets on their match.
Betting on a match nobody else bets on will earn you 50 points profit if you are right.
Betting on the favourite will earn you under 50 points profit if you are right.
Betting on the underdog will earn you more than 50 points profit if you are right.
You ARE allowed to make 'fake' bets here and also send bets by PM, but please add a note in the PM that the ones in the thread are not to be counted just so I don't make a mistake. All bets will be posted at the end of the betting session (but not who made them), and the deadline for battling announced at that time (it's going to be 12 days, please contact your opponent in advance).
edit: Maugoross has been subbed in for SOMALIA.